Institutional investors’ corporate site visits and dividend payouts

Abstract

Using a sample of Chinese listed firms in the Shenzhen Stock Exchange from 2013 to 2019, this study examines the impact of institutional investors' corporate site visits on firms’ dividend payouts. We find that corporate site visits can significantly promote dividend payouts, and this result is robust after using Heckman two-step method, propensity score matching (PSM) procedure and instrumental variable approach to address potential endogenous problems. Besides, consistent with the agency conflict perspective, further tests show that corporate site visits can significantly reduce dividend underpayment, and in companies with more severe agency conflict or weaker corporate governance, corporate site visits play a more significant role in improving dividends level. Finally, we provide evidence that the relationship between site visits and dividends varies with different characteristics of visited firms. The above empirical results are robust to alternative samples and alternative measures of corporate site visits and dividend payouts.